We are maintaining our Neutral stance on
Endo Health Solutions
(
ENDP
) with a target price of $33.00. Our long-term recommendation is in
line with the Zacks #3 Rank carried by the stock in the short-run.
Endo Health Solutions, formerly known as Endo Pharmaceuticals, is a
diversified health care company that operates in the US and focuses
on the areas of pain management, urology, oncology and
endocrinology. Endo Health reports results through four segments:
Branded Pharmaceuticals, Generics, Devices and Services. The
company is currently headquartered in Chadds Ford, Pennsylvania.
In May 2012, Endo Health announced disappointing first quarter 2012
numbers, missing both on revenues and earnings. Revenues were hurt
by temporary supply issues at
Novartis
' (
NVS
) manufacturing facility which affected sales of Opana ER and
Voltaren Gel.
The earnings miss was attributable to higher-than-expected costs
and lower-than-expected revenues. The supply issues have, however,
been resolved. Following the resumption of normal supply of the key
drugs, we expect Endo Health to achieve its revenue guidance of
$3.15 billion - $3.30 billion. We also expect Endo Health to
achieve the earnings per share guidance for 2012 ($5.00-$5.20)
driven by its strong product portfolio.
Meanwhile, Endo Health is on an acquisition/deal signing spree to
expand its business having completed four major acquisitions since
2010. We believe that these acquisitions are steps in the right
direction and will help counter the generic threat that Endo Health
is currently facing for many of its key products, including lead
drug Lidoderm. Patent disputes and entry of generics have the
potential to weaken Endo Health's top-line substantially.
Even though Endo Health is looking to combat the generic threat by
introducing new products, the company's financials will be affected
adversely if the new products perform below expectations.
Moreover, pipeline setbacks have the potential to limit the upside
potential from current levels.
ENDO PHARMACEUT (ENDP): Free Stock Analysis
Report
NOVARTIS AG-ADR (NVS): Free Stock Analysis
Report
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